Karl Rove’s Crossroads Group May Have Lied on Tax Filing Documents

Posted on Nov 25, 2013

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Right-wing political campaign puppeteer Karl Rove’s multimillion-dollar Crossroads GPS group may have lied on its 2012 federal tax filings, the investigative organization ProPublica reports Monday, by claiming that money earmarked for “social welfare” was actually used to fund political campaigns. Although that might seem like a technical violation, Rove’s group earned its nonprofit status by claiming that its donations to other organizations were not for political expenditures.

Oops.

The return, signed under penalty of perjury, specified that the grants would be used for social welfare purposes, “and not for political expenditures, consistent with the organization’s tax-exempt mission.”

New tax documents, made public last Tuesday, indicate that at least $11.2 million of the grant money given to the group Americans for Tax Reform was spent on political activities expressly advocating for or against candidates. This means Crossroads spent at least $85.7 million on political activities in 2012, not the $74.5 million reported to the Internal Revenue Service. That’s about 45 percent of its total expenditures.

ProPublica tried to get an explanation from Crossroads spokesman Jonathan Collegio, who instead—basic deflection maneuver—questioned the premise and wondered whether Americans for Tax Reform wasn’t spending Crossroads’ 2012 contribution on politics, but cash carried over from previous budget years. ProPublica put that question to Marcus Owens, the former head of the IRS’ Exempt Organizations division, whose reply was succinct: “That’s called bullshit with a serving of horseshit on the side,” Owens said.

ProPublica goes into detail about how the money is used determines tax status.

Social welfare nonprofits, also known as dark money groups because they don’t have to report their donors, are allowed to spend money on politics as long as their primary purpose is social welfare. The groups often count so-called issue ads that stop short of advocating for or against a candidate and grants toward that social welfare mission. Since the Supreme Court’s 2010 Citizens United decision allowed corporations and unions to spend directly on election ads, these nonprofits have turned into the vehicle of choice for anonymous spending, dumping more than $254 million into the 2012 elections.

One of the largest such groups is Rove’s Crossroads, which has spent tens of millions of dollars pushing a right-wing agenda. Yet the people filling Crossroads’ bank account—and influencing elections—remain hidden from public scrutiny.

We should note that Rove told ABC News this summer that Crossroads was following federal laws “very closely.”

“The leadership knew right from the get-go they were going to be looked at closely,” Rove said on ABC’s “This Week.”

“So the laws and rules that the IRS has promulgated for decades were followed very closely by GPS for exactly that.”

Apparently not, judging by the ProPublica revelations.

Unfortunately, after the IRS anti-tea party faux scandal earlier this year, don’t count on the agency to do much to bring Rove and Crossroads to account, Owens told ProPublica. “They’re going to keep their heads down,” he said.